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CASE NO.: Appeal (civil)  703 of 2008

PETITIONER: STATE OF CHHATTISGARH & ORS.

RESPONDENT: RAMAVTAR ROAD CONSTRUCTIONS PVT. LTD.

DATE OF JUDGMENT: 22/01/2008

BENCH: ALTAMAS KABIR & P. SATHASIVAM  

JUDGMENT: JUDGMENT

O R D E R (Arising out of SLP(C) No. 3942/06)              Leave granted.         The respondent herein appears to have  entered into contracts with different  departments of the State of Chhattisgarh for execution of certain works. The  contracts entered into between the parties provide for reference of disputes  between the parties to arbitration.  The said provision is  contained in clause 29  of the Agreement which provides as follows :-         \023Clause 29 \026 Except as otherwise provided in this contract all  questions and disputes relating to be meaning of the specifications,  designs drawings and instructions herein before mentioned as to thing  whatsoever in any way arising out of or relating to the contract,  designs, drawings, specifications, estimate, concerning the works, or  the execution or failure to execute the same, whether arising  during  the progress of the work, or after the completion or abandonment  thereof shall be referred to the Superintending Engineer in writing for  his decision for his decision, within a period of 30 days of such  occurrence.  There upon the Superintending Engineer shall give his  written instructions and/or decisions within a period of 60 days of  such request.  This period can be extended by mutual consent of  parties.         Upon receipt of written instructions or decisions, the parties shall  promptly proceed without delay to comply such instructions or  decisions.  If the Superintending Engineer fails  to give his  instructions or decisions in writing within a period of 60 days or  mutually agreed time after being requested and if the parties are  aggrieved against the decision of the Superintending Engineer the  parties may within 30 days prefer an appeal to the Chief Engineer  who shall afford an opportunity to the parties of being heard and to  offer evidence in support of his appeal.  The Chief Engineer will give  his decision within 90 days.  If any party is not satisfied with the  decision of the Chief Engineer he can refer such disputes for  arbitration to an Arbitration Tribunal to be constituted by the State  Government.  In case such an Arbitration Tribunal is not constituted  by the State Government, then the aggrieved party shall invoke  Arbitration and Conciliation Act, 1996 \026 as amended till the date of  such reference.\024                          It is to be noted that arbitration proceedings  in the State of Madhya Pradesh  were being conducted under the Madhya Pradesh Madhyastham Adhikaran  Adhiniyam,1983, which provided for the  constitution of an Arbitration  Tribunal.  Pursuant  to the Madhya Pradesh State Reorganization Act,2000, the  State of Chhattisgarh was carved out of Madhya Pradesh with effect from 1st  November,2000.  In terms of the aforesaid Act the Tribunal constituted under  the  Madhya Pradesh Madhyastham Adhikaran Adhiniyam,1983, continued to  function to exercise jurisdiction over the State of Chhattisgarh for a period of  two years from the appointed day.  According to the above, the Arbitration

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Tribunal constituted under the  Madhya Pradesh Madhyastham Adhikaran  Adhiniyam, 1983, continued to have jurisdiction in the State of Chhattisgarh  upto 31st October,2002.  The said Tribunal, thereafter, ceased to have  jurisdiction in the State of Chhattisgarh  with effect from 1st November,2002.         As it appears from the materials on record, the State Government of  Chhattisgarh adopted the  Madhya Pradesh Madhyastham Adhikaran  Adhiniyam,1983, and restyled the same as Chhattisgarh Madhyastham  Adhikaran Adhiniyam,1983, and the Arbitration Tribunal was constituted by  the State of Chhattisgarh under Section 3 of the Chhattisgarh Madhyastham  Adhikaran Adhiniyam, 1983 with effect from 1st March,2005.  However, the  said Tribunal, so constituted by the State Government, started functioning only  with effect from 2nd September,2005.         The respondent herein, along with others, filed six different applications before  the Chhattisgarh High Court under Section 11 of the Arbitration and  Conciliation Act,1996, for appointment of arbitrators to adjudicate upon the  disputes arising between the said parties and the State of Chhattisgarh before   the Arbitration Tribunal under the Chhattisgarh Act began to function with  effect from 2005.  The said applications were taken up by the High Court and  appropriate orders were passed therein.         Before the High Court an objection was taken on behalf of the appellant herein  that, inasmuch as, the Arbitration Tribunal had already been constituted on 1st  March,2005, the subsequent applications under Section 11 of the 1996 Act were  not maintainable,  and, in any event, should have been transferred  to the  Tribunal when it started functioning.  Having regard to the provisions of clause  29, the High Court of Chhattisgarh held that pending applications under  Section 11 of the Arbitration and Conciliation Act, 1996, prior to coming into  operation of Arbitration Tribunal were  maintainable under the  1996 Act in  terms of the said clause, and, accordingly, passed  appropriate orders  thereupon.         It may be relevant to point out that out of the six applications allowed by the  common order of the Chhattisgarh High Court, only one Special Leave Petition,  namely, against MCC No. 143 of 2005 has been challenged in this  Court by  way of Special Leave Petition (C) No. 3942/06.  For reasons best known to the  appellant, no further steps were taken with regard to the remaining five  applications and we are informed that arbitration proceedings continued in  respect of all the six matters, including this matter, and the appellant herein  also participated in all the proceedings which are almost at the final stage.  We  are also informed that in the present matter the hearing has been concluded and  only passing of the award is to be effected, but the same has also not been done   on account of the order of stay passed by this Court on 9.10.2006.         Appearing on behalf of the appellant, learned counsel submitted that having  regard to the constitution of the Arbitration Tribunal under the Chhattisgarh  Act on 1st March,2005, the applications before the High Court under Section 11  of the 1996 Act were not maintainable. It was also submitted that, in any event,  the same could not also be saved by the provisions of Section 20(2) of the   Madhya Pradesh Madhyastham Adhikaran Adhiniyam,1983, having regard to  the fact that,  no arbitration proceeding was pending at the time when the  Arbitration Tribunal started functioning in the State of Chhattisgarh with effect  from 2nd September,2005. Learned counsel was unable to explain as to how the  appellant did not choose to move further in respect of the other five  applications.         On behalf of the respondent, it was pointed out that despite the fact that the  Arbitration Tribunal had been constituted in the State of Chhattisgarh with  effect from 1st March,2005, the same did not function prior to 2nd  September,2005, and it is during this period that the application was filed by  the respondent before the High Court under Section 11 of the 1996 Act.   Questioning the submissions made on behalf of the appellant that no arbitration  proceedings were pending when the Arbitration Tribunal  under the  Chhattisgarh Act begun functioning, learned counsel referred to Annexure R-1  of his counter which is a notice dated 19th October,2004, addressed to the   Superintending Engineer, Office of the Development Commissioner, Bilaspur,  in relation to the Agreement whereunder  payments appear not to have been  made in respect of the final bill which had been raised.  In the said notice it was  specifically mentioned that the respondent was invoking his rights under clause  29 of the conditions of the contract.   Learned counsel also pointed out that

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since there was no response from the Superintending  Engineer,  a further letter  was addressed to the Chief Engineer,  Office of the Development  Commissioner, PMGSY, Raipur, on 6th April,2005 in respect of the same  dispute and a prayer was made by the respondent  for an opportunity of  hearing in person to resolve the dispute.  According to the learned counsel,  there was no response by the Chief Engineer as well and  the respondent was,  therefore, constrained to move the application under Section 11 of the  Arbitration and Conciliation Act,1996, before the Chhattisgarh High Court on  10th May,2005.         Learned counsel also pointed out that the said two opportunities had been  given as per the provisions of the 2nd paragraph  of Clause 29 which provided  that in case of any further dispute remaining after the Chief Engineer had an  opportunity to look into the matter, parties would be at liberty to move the  High Court under the provisions of the 1996 Act.         According to the learned counsel, the application under Section 11 had been  made strictly in accordance with the provisions of the Agreement and also  having regard to the fact that the Arbitration Tribunal under the Chhattisgarh  Act was not available at the time when applications were made.         Having heard learned counsel for the respective parties, we see no reason to  differ with the order passed by the High Court since in our view the respondent  had fulfilled all the conditions even under Clause 29 of the Agreement  before  moving the application under Section 11 of the Arbitration and Cociliation  Act,1996.  It is pertinent to note that when the applications were made, the   Arbitration Tribunal was not available so that the respondent could move the  said Tribunal.         What is equally significant is the fact that out of the six applications the State o f  Chhattisgarh chose to prefer this Special Leave Petition in respect of only one  of six applications and appear to have  accepted the order of the High Court as  far as the other five matters are concerned.  In our view, the present appeal is  also not maintainable on that score as well.         We, accordingly, see no reason to interfere with the judgment of the High  Court and the appeal is, therefore, dismissed, but without any order as to costs.         The interim order passed in the Special Leave Petition is  vacated.